Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2026.

Instructions

a. Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-ormarket inventory for October 31, 2026.

b. A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60,000. An accurate physical count reveals only $47,000 of inventory at lower-of-costor- market. List the factors that may have caused the difference between the computed inventory and the physical count.

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Inventory, October 1, 2026 At cost At retail Purchases (exclusive of freight and returns) At cost At retail Freight-in Purchase returns At cost At retail Markups Markup cancellations Markdowns (net) Normal spoilage and breakage Sales revenue $ 52,000 78,000 272,000 423,000 16,600 5,600 8,000 9,000 2,000 3,600 10,000 390,000